Entitlement Bargaining

Your Turn: What's Acceptable?

11.14.12 5:04 PM ET

I was just reading through the comment thread on yesterday afternoon's post and finding it pretty fascinating. So let me ask you, my liberal readers, what you would find it acceptable for Obama to compromise on. Conservatives of course may weigh in as well, but I'm particularly interested here in what the people who gave Obama their vote think.

I'm going to list five ideas floating around the Beltway. You can order them from acceptable to unacceptable, if you wish, and give us your thoughts on them. I'll throw in some my thoughts in below as well.

1. Index Social Security benefits to the so-called "chained" consumer price index. This would have the effect of reducing benefits as a person ages, so that one who lives to 88 or 90 would see monthly checks much lower than under the current formula. I think accepting this would constitute a very real diminution in our social insurance policy and would really be crossing a line.

2. Increasing the retirement age. It's increasing right now; see this chart. For me (born in 1960, when I was, and after), full retirement age is going to be 67. There are no plans to raise it beyond that. Would doing so be okay? I don't exactly like this idea, but I'd conceivably be okay with it as long as there are exceptions made for people who work in certain labor-intensive categories. I remember reading that some other OECD countries do this.

3. Increasing the Medicare eligibility age. Right now, of course, it's 65, with some exceptions for younger people with really bad diseases. What if that, too, were raised gradually to 67? Here's a Kaiser Family Foundation paper on the subject for your further perusal. Personally, unlike most Washington liberals, I don't think this is an indefensible idea, and I mean that even if it affects me personally and directly. Of course, thought has to be given to how 65- and 66-year-olds would be covered. You'd need to link it in some way to the increase in retirement age, I'd imagine.

4. More straightforward cuts to Medicare and Medicaid. Last year, when Obama and Boehner came close to an $800 billion deal, Obama put on the table $250 billion in Medicare cuts over 10 years and $110 billion from Medicaid in a shorter time span. Harry Reid and Nancy Pelosi were pretty nearly ready to agree to these numbers last year as long as they got the tax hike, which Boehner couldn't deliver. I'm not crazy especially about Medicaid cuts, but I'm not enough of an expert to know exactly where those cuts would fall.

5. None of the above. Many Washington liberal insiders say: do nothing. Give nothing on entitlements at all. Entitlements aren't really part of this problem. Actually, that depends on how you calculate the budget, whether you count entitlements as separate from or included in the federal budget. The Social Security Trust Fund has money to last another 30 years, but the Medicare Trust Fund just nine. But the argument here is that any tampering with entitlements is a betrayal.

Have at it! And send along other ideas if you like. I agree with Scroll Down from that other thread, who wants to lift the cap (right now around $108,000) on the FICA tax. Were it up to me, we'd just have a much more progressive FICA tax, and one that brought in more revenue, and we'd be done with it. But Obama can't propose that because it would be a middle-class tax increase (i.e., he'd be raising the FICA tax on people earning $109,000 and up, which he promised not to do). Besides, Republicans wouldn't go for it anyway, because it's a tax increase. And even in less rancorous times, restructuring the FICA tax would be a gargantuan job. So that one ain't happening. I'll be interested in your thoughts here.